As Albert Einstein is reported to have said, the definition of insanity is doing the same thing over and over and expecting different results.With this in mind, note the similarity of events leading up to the stock market crash of 1929 and the Great Depression which followed, with the

comparable causes and outcomes of the real estate and stock market meltdown of 2008from which the nations economy has yet to fully recover.The Roaring 20s were partly so called because the Federal Reserve fostered a 60 percent increase in the nations money supply preceding the markets Black Monday crash. When the resulting stock market bubble burst, credit contracted, banks failed, and consumers slashed purchasingthus triggering business failures and massive unemployment. The jobless rate reached 25 percent at one point. Making Matters Worse

With the economy cratering, policymakers acted swiftly to make matters even worse. They raised the top tax rate to 63 (and later 94) percent, hiked tariffs through the notorious Smoot-Hawley Act, and forced manufacturers into government-controlled cartels through the National Industrial Recovery Act. All this increased the cost of doing business by an estimated 40 percent. Adding insult to injury, Congress and the president created the Agricultural Adjustment Act to impose new taxes on food processors, using the proceeds to pay farmers to destroy their own crops and livestock. The Wagner Act gave unprecedented power to labor unions, again boosting production costs. Meanwhile, President Franklin Roosevelt leveled a barrage of devastating criticism against businessmen and free enterprise, inveighing against economic royalists. Federal spending skyrocketed, and

Americans are being lied to regularly and massively. It needs to stop.After all, it was We the People who created the United States government, not the other way around. They work for us, not we for them. We are the masters, the employers. They are our servants, the employees. What else makes sense?We hold these truths to be self-evident, says the Declaration of Independence, and Americas political birthright is truth.

Granted, certain matters involve the nations security and must be kept secret. Other matters are of a personal nature and should be kept private. But beyond these two legitimate exceptions, what right does our government have to withhold the truth from uslet alone to misinform, ill-inform,

or outright lie to us? No right at all.We Cant be Trusted?

Yet today, wherever you look, the officers and agencies of our government are regularly, actively, and aggressively doing just that. Truth is being withheld every day from you and me as citizens. Our employees seem to have decided that we, their employer, cannot be trusted with a full accounting of Federal Reserve policies or IRS practicesor even with basic historical facts.

Editor, John Andrews

Principled Ideas from the Centennial Institute

Volume 7, Number 6 June 2015

Publisher, William L. Armstrong

Truth isour politicalbirthright.

Bill Armstrong, President of Colorado Christian University since 2008, has been a leader in Colorados political, business, and civic life for over half a century.

Nathan Hale, a hero of the Revolutionary War, is the pen name of one of Americasmost successful business executives, who wrote this article at our invitation.

Centennial Institute sponsors research, events, and publications to enhance public understanding of the most important issues facing our state and nation. By proclaiming Truth, we aim to foster faith, family, and freedom, teach citizenship, and renew the spirit of 1776.

RECESSION REALITY CHECK:LEARN FROM THE LAST ONE

TO AVERT THE NEXT ONEBy Bill Armstrong

ITS NO WONDERTHE CREDIBILITY GAP

KEEPS WIDENINGBy Nathan Hale

Age 16-20 * June 21-26 at CCU

Go to Hewittccu.com

Young Leaders

with Hugh Hewitt

Continued on Page 3

Continued on Page 2

with it the national debt. Lawrence Reed tells the whole sad story in a previous issue of Centennial Review (December 2010), adapted from his brilliant monograph, Great Myths of the Great Depression. So the Great Depression dragged on for over a decade, including a second government-induced downturn in 1937, until economic activity was finally stimulated by the onset of World War II. If all this sounds familiar, the reason is that its almost exactly what happened 80 years later. The Federal Reserve again let the money supply grow at an unsustainable rate and produced huge bubbles in real estate and stocks. At the same time, Congress mandated lenders to give mortgages to borrowers with low credit ratings and miniscule down payments, loans which quickly went into default. Policymakers in Overdrive

Policymakers, mimicking the failed decisions of the 1930s, went into overdrive to exacerbate the situation. They bailed out banks, nationalized mortgage markets, and seized industrial companies, squeezing out bondholders in the process. Predictably, GDP dropped, banks and businesses failed, and home foreclosures skyrocketed. Millions of homeowners found themselves under water on their mortgage loans, owing more than the reduced market value of their homes. Perhaps worst of all, millions of American workers lost their jobs, a good many of them permanently. Recent favorable news about unemployment is largely accounted for by the millions of discouraged workers who have quit seeking jobs and are therefore no longer officially counted as unemployed. With a reality check, government claims of fewer than nine million unemployed should be restated to

Centennial Review February 2015 2

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CENTENNIAL REVIEW is published monthly by the Centennial Institute at Colorado Christian University. The authors views are not necessarily those of CCU. Designer, Bethany Bender. Illustrator, Benjamin Hummel. Subscriptions free upon request. Write to: Centennial Institute, 8787 W. Alameda Ave., Lakewood, CO 80226. Call 800.44.FAITH. Or visit us online at www.CentennialCCU.org.

Please join the Centennial Institute today. As a Centennial donor, you can help us restore Americas moral core and prepare tomorrows leaders. Your gift is tax-deductible. Please use the envelope provided. Thank you for your support.- John Andrews, Director

Americans have been

bamboozled.

something like 30 million, charged Jim Collins, chairman and CEO of the Gallup polling organization, in a recent article entitled The Big Lie. That would boost the ostensible unemployment rate of 5.5 percent (April 2015) to more than 19 percent.So have we learned anything from this bitter experience? Sad to report, most Americans have been bamboozled into believing that the private sector caused the 2008 crash and that the nation has been saved only by the wisdom of Washington, D.C. Nine Realities

Such notions are palpably false. Despite vociferous efforts to make mortgage lenders and Wall Street speculators the scapegoats for the nations economic miseries, the reality is very different. We can list at least nine obvious ways:1) In reality, the housing bubble and subsequent crash that left millions of homeowners under water on their mortgages (owing more than the market value of their home) was

caused by excessive monetary expansion by the Federal Reserve. The Fed made the same mistake in the early years of this century that it made leading up to the 1929 stock market crash and the Great Depression of the 1930s.

2) In reality, the stock market went bust in 2008 for the same reasontoo much money sloshing around the nations financial markets, which led to what Alan Greenspan prophetically called irrational exuberance, victimizing gullible investors.3) In reality, the real estate market cratered because President Bush, President Obama, and the Treasury Department, along with bureaucrats at HUD, FHA, and VA, deliberately encouraged loans to unqualified borrowers. 4) In reality, Rep. Barney Frank, Sen. Chris Dodd, and their congressional colleagues abetted the executive branch by ignoring warnings that lending money to unqualified borrowers with low down payments and even lower credit scores would lead to massive defaults. They denied that credit standards were too loose and prodded private lenders to make more and more affordable loans. The result was a tsunami of defaults, foreclosures, and human misery.5) In reality, as the downturn morphed into a full-blown recession, the economy experienced additional drag from

Bush and Obama share blame for the Great Recession, as do Hoover and Roosevelt for the Great Depression

ARMSTRONG: REALITY CHECKContinued

Congresss earlier enactment of the Sarbanes-Oxley bill (2002), a bundle of new regulations which have damaged capital markets, reduced initial public offerings, and increased public company compliance costs by 130 percent. Additionally, the law imposes a brutal opportunity cost as business executives are incentivized to spend disproportionate time thinking about compliance instead of profitable, job-creating activity.6) In reality, Congress alsothrough the Dodd-Frank billcreated a new consumer protection agency, reorganized financial institution supervision, and set up new regulators which are required by the statute to promulgate 243 rules, conduct 67 studies and issue 22 periodic reports, according to research by the Davis Polk firm. One of those many requirementsthe so-called Volcker rule prohibiting banks from proprietary tradinghas proven so

complicated that rulemaking took five years and the effective date was postponed to 2016. And confusion lingers even now, suggesting further delay in implementing the rule. 7) In reality, the Federal Reserve

forced interest rates to nearly zero by purchasing $4.5 trillion of bank assets, an unconventional monetary policy that seems to have done little to restore economic growth but has dramatically lowered interest income for retired persons and other savers. 8) In reality, the implementation of Obamacare has prompted many firms to fire workers or cut back their schedules to less than 30 hours per week, the threshold for mandatory inclusion in this socialized medicine scheme.9) And finally, in reality, Congress went on a spending spree, running up the bonded debt to over $18 trillion and piling up an estimated $127 trillion in unfunded liabilities for public employee pensions, Social Security, Medicare, and more. Phony Pretext

So much for the fallacy that the economic meltdown of 2008, and the recession that followed, were primarily caused by unscrupulous Wall Street manipulators and mendacious mortgage lenders. The culprit, in reality, was government itself.Equally fallacious, and more worrisome, is the widespread belief that the ensuing recovery, such as it was, owed everything to the guidance of Washington wise men whose intervention in the private economy saved the day. This pervasive notion served as the pretext for unprecedented expansion of government power with a severely adverse effect on economic growthand on the nations future prospects for prosperity. So what to do? For starters, we should recall the wisdom of Ronald Reagan, who said as he assumed the presidency in 1981: Government is not the solution to our problem. Government is the problem. The Gipper was right. What we need is not more government, but less. Heres a common-sense agenda for learning from the last recession and heading off the next one:

Centennial Review February 2015 3

Governmentitself wasthe culprit.

For a Rapid Rebound

Lets repeal Dodd-Frank, Sarbanes-Oxley, and Obamacare, along with all the new regulatory agencies they created and the tens of thousands of pages of regulations they fostered.

Lets stop subsidizing commodities, exports, wind power, AMTRAK, and a thousand other schemes that dont make economic sense.

Lets abandon the idea of the Federal Reserve as a super regulator and manager of the national economy, meeting behind closed doors and with little public scrutiny. Instead, lets hold the Fed accountable for maintaining a stable value of currency to facilitate domestic and international trade, thereby creating new jobs and prosperity from coast to coast.

Lets ignore President Obamas call for a huge tax increase and instead cut back on business taxes, which are among the highest in the world. Also lets cut personal tax rates, which have created so much hardship for working families.

Lets amend the U.S. Constitution to forbid budget deficits except in a time of national emergency certified by a two-thirds majority vote of the House and Senate.

Lets stop criticizing and demonizing the investors and entrepreneurs whose capital and ingenuity are the best hope for restoring a solid economic growth rate, and start praising them as they deserve.

Everyone hopes America will not soon have another crash, or even another recession. But when the economy does begin slowing down, as it eventually will, we should urge policymakers to learn from the 2008 debacle and follow this common-sense agenda for a rapid rebound.

HALE: CREDIBILITY GAP Continued

Our government routinely and disdainfully condescends to millions of its own citizens and taxpayers and voters, upon whose supposed education it has spent (or too often squandered) untold billions.Consider six illustrative examples out of many we could cite. The truth about each, though easily discovered, is seldom admitted or even hinted by politicians, the media, and the education system.1) The 2008 financial meltdown, so devastating to the U.S. economy, was primarily a responsibility of our own government, not of the private sector. The acknowledged simultaneous causes of that crisis included artificially low interest rates set by the Fed, activist legislation with unintended consequences (such as the Commodity Futures Modernization Act), subprime

Centennial InstituteColorado Christian University8787 W. Alameda Ave.Lakewood, CO 80226

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Centennial Review February 2015 4

Its timeto insiston truth.

Bill Armstrong on RealityNathan Hale on Truth

The financial meltdown of 2008 prompts this pair of biting commentaries by CCUs President and by a good friend of CCU, writing incognito. Politicians culpability is inescapable, says Armstrong. And their aversion to truth is intolerable, adds Hale.

two-parent family. Single-parent families, the increasingly prevalent norm, are failing in droves, primarily the victims of destructive welfare policies.6) And now, with the Internet facing imposition of clumsy, counter-productive net neutrality regulations, what has arguably been the greatest period of human innovation since the invention of the printing press is about to be shut down by a super-secretive governmental panel of unelected bureaucratsthe Federal Communications Commission.

Fed Up

Need we say more? We could go on with similar examples for days, but from this half-dozen the point is clear. Truth is the foundation of our society, the foundation of

our system of government. Yet the government itself, at all levels and too often with both political parties collaborating, screens citizens from the truth and justifies policies with untruth. Its no wonder the credibility gap keeps widening. People are fed up with being misled and lied to. As we say after losing a big football game, its time to go back to the basics. Its time to insist on truth.

All the Great Ones, Almost, Will be There. Will You?Western Conservative Summit 2015Your Story: Freedom Alive June 26-28 in Denverwww.westernconservativesummit.com

Students Age 16-20 Register Now forYoung Conservatives Leadership Conference IIWere the City on a Hill June 21-26 at CCUwww.hewittccu.com

mortgage lending policies pushed by Barney Frank, risky home loans by Freddie Mac and Fannie Mae, and dereliction by the SEC and other regulators.All five of those factors stemmed from government. While the financial industry does not have clean hands either, with such factors as its own mismanagement, the Wall Street securitization fiasco, the rating agencies, and mark-to-market accounting rules, public policy must bear most of the blame.2) Likewise, the duration and severity of the Great Depression of the 1930s were primarily the fault of government, not of the private sector.Public policy drove all three major causes of the Depression, including faulty Federal Reserve actions to close 9,000 banks; faulty presidential actions by both Hoover and Roosevelt regarding the gold standard, deflation, and more; and faulty legislative policy regarding tariffs, taxes, and the myth of communism. Other nations economies, not similarly burdened, recovered more rapidly than the U.S. economy.Blame the GUMS

3) Our system of public education has failed us miserably. America is first in the world in per capita education spending and yet we rank in the lower third in academic achievement when compared to 33 other industrialized nations. The blame, once again, lies with the unholy alliance of governments, unions, monopolies, and special interests (the GUMS, as I call them), though they are always blaming others.4) Our governments 50-year, $22 trillion War on Poverty has also failed miserably. The gap between the rich and the poor grows wider every day. And as social scientists from Daniel P. Moynihan to Charles Murray have shown, the root of the problem is cultural poverty (often government-promoted) much more than financial poverty.5) Further, and related to this, our government bears the primary responsibility for the breakdown of the traditional